Forex Today: Markets Focus on US Inflation

The US Dollar (USD) has surrendered part of Friday’s strong gains. Renewed speculation over a possible US-Iran agreement has put the currency under fresh selling pressure and driven crude oil prices sharply lower.

Below 102.00, the US Dollar Index (DXY) has opened the week lower. US Treasury yields have edged down across the curve, with investors cautious ahead of US inflation figures. The data schedule begins with the NFIB Business Optimism Index, followed by ADP Employment Change Weekly, the Inflation Rate and the API’s weekly US crude oil inventory report.

The key 1.1200 resistance level is back in focus for EUR/USD as renewed buying follows two consecutive daily declines. On an otherwise empty domestic calendar, speeches are scheduled from the ECB’s Cipollone and Lane.

Back above 1.3400 after two consecutive daily losses, GBP/USD has posted substantial gains alongside other risk-sensitive currencies. The BRC Retail Sales Monitor is next on the calendar, ahead of speeches from the BoE’s Lombardelli and Pill.

Below 158.00, USD/JPY has begun the week under pressure, although its multi-day consolidation has continued for another session. Upcoming releases include Household Spending, Current Account figures, Bank Lending data and the Eco Watchers Survey.

The 0.6900 level has been reclaimed by AUD/USD, which has moved higher after two straight daily declines as sentiment towards risk assets improved sharply. Australia’s next releases are the Westpac Consumer Confidence gauge and NAB Business Confidence.

Below $87.00 per barrel, front-month WTI futures (December contract) are approaching multi-week lows. Prices have turned lower again after two consecutive daily gains, amid renewed optimism surrounding the US-Iran-Hormuz conflict.

Above $4,100 per troy ounce, gold has reached two-day highs. The advance follows renewed US Dollar selling, lower US Treasury yields across the curve and another daily decline in crude oil prices.